South Korea for much of the last decade has had a free hand in the Asia-Pacific region’s casino market. In that time the country has built itself a successful casino industry based mainly on foreign gamblers. But in the coming years South Korea might suddenly find itself encircled by a host of competing markets: to the north casinos are being developed in the designated gaming zone near Vladivostok in Russia, to the south in the Philippines large casino resorts are nearing completion, and to the east Japan’s politicians seem close to permitting casinos too. South Korea will have to fight hard to maintain its place in the new Asia-Pacific gaming market.

South Korea currently has 17 casinos, but 16 of these properties are open to foreign visitors only. Just one casino – the Kangwon Land Resort – is open to both South Korean nationals and foreign visitors. Foreigners-only casinos have been permitted in a select number of cities and provinces with international airports, passenger terminals, or special tourism zones.
In 2006 South Korea’s domestic casino market became more competitive as the Grand Korea Leisure Corp (GKL) opened three new casinos to attract foreign visitors, mainly from China. GKL is a subsidiary of the state’s Korea National Tourism Organisation (KNTO) and runs the casinos under the Seven Luck brand. 

Since its entry into the market in 2006, GKL has become the market leader and announced plans to run an initial public offering (IPO) in 2009 and 2010 to sell 49 percent of its shares. At the time of the announcement GKL’s Chief Executive Kwon Oh-nam explained that the sale of the shares will “stabilise the management of the casinos” and help improve the company’s competitiveness.
Prior to the new state-run casinos, Paradise Group was the market leader in the foreign-casino market. It operates five casinos, the biggest being Paradise Walker Hill in Seoul. Back in 2005 Paradise’s casinos had a market share of almost 90% and casino revenues of KRW 388.5bn. By 2007 its market share was just under 50% and revenues were KRW 308.9bn. 
In the space of two years GKL’s Seven Luck had claimed a market share of 45% and revenues of KRW 285bn in its three casinos.
In the middle of the last decade South Korea had a lot less competition for international casino gamblers in the region. Certainly players could travel to Australia and Macau, or even across the Pacific to Las Vegas, but Singapore’s resorts were still in the early stages of planning, Japan seemed a long way from permitting casinos, and Putin’s gaming zones in Russia were still several years away. 
In 2005 Japanese customers made up 53% of visitors to South Korea’s foreigner-only casinos. In 2005 there were 302,000 Japanese casino visitors. By 2008 Japanese visitors had grown to 608,000, but this was now 48% of all visitors. In 2009 there were 798,000 Japanese visitors, still accounting for 48% of all visitors. In 2010 the proportion of Japanese visitors had fallen to 41%.
The number of Chinese visitors to South Korea’s casinos has been increasing rapidly since 2005. There were just under 107,000 Chinese visitors in 2005, a figure which rose to 585,163 by 2010. As a percentage of foreign (non-Korean) visitors, the Chinese represented 18.6% in 2005 and 30.1% in 2010. The South Korean government has recognised that Chinese tourists are a growing sector and has implemented plans specifically to try and attract them to visit the country. In August 2010, for example, the government introduced the Chinese Tourist Visa System Improvement Program which extends the issue of multiple entry visas. 
A “special task team” has also been set up with the specific task of attracting Chinese tourists. There were 1.3 million Chinese tourists to South Korea in 2009 and the aim is to have 3 million by 2012.
The casinos have also adapted their marketing strategies accordingly. Whereas previously they had focused on Japanese gamblers, now they are targeting Chinese gamblers based in cities within a two-hour flight of South Korean casinos.
As in Macau, Baccarat is the most popular game in the Korean casinos, followed by Blackjack and roulette and there are 526 gaming tables in the 16 casinos.
Despite being very successful, and bringing many thousands of visitors to South Korea each year, the gambling industry – including casinos – is not held in high regard in South Korea because of various scandals. Kangwon Land, for example, has been the subject of 23 lawsuits from problem gamblers who blame the casino for exacerbating their addiction by lifting entrance bans and allowing them to place bets in excess of the set limits. 
The casino industry in South Korea has generally fared well in the economic crisis. In 2009 visitor numbers increased as did revenues. Kangwon Land has seen the number of VIP visitors falling and consequently a fall in VIP table drop. But domestic visitors have risen, helped by the completion of a new road to the resort.
More pressing concerns for the sector are the surprise doubling of casino tax to 20% of revenues and the suggestion that the government is looking to impose a cap on casino earnings.
But the Korean gaming industry is responding to the fact that it is facing increased competition for players in the region. Local media reported at the beginning of January 2011 that an un-named US company had made a visit to Seoul with a view to investing in a new hotel and casino complex on Yeongjong Island, Incheon. 
Steve Wynn said in May 2011 that he is interested in investing in a casino resort in South Korea, and would be willing to invest up to US$ 3bn in the venture if it were not a foreigner-only casino. Wynn subsequently confirmed he had made a visit to Incheon in March 2011.
At the start of October 2011 Paradise Group was selected by the Incheon International Airport Corporation as the preferred bidder for the casino resort near Incheon International Airport. Paradise Group will invest KRW 662.1 billion (US$572 million) in capital to build an integrated resort comprising of luxury hotels, a convention centre, shopping outlets, and events arena.
Phase one will be ready by 2016 and will include a 500-room luxury hotel, foreigners-only casino, and shopping arcade. The second phase will be completed by 2018 and will add an additional 250-room hotel, convention centre, and spa. Paradise Group’s existing Golden Gate Casino, currently located in the Hyatt Regency Incheon, will relocate into the resort.
At the end of June 2011 the Minister of Tourism said that Korean citizens should be allowed to play in more than the one casino currently available to local citizens. 
The government recognises that Koreans simply go abroad to gamble and tax revenues are lost. But rather than relaxing regulations for the existing foreigner-only casinos it is more likely that new regulations for integrated resorts will allow Koreans to gamble, along the lines of the model adopted successfully in Singapore.
Of course, there is no guarantee that all of the competing projects wanting to steal South Korea’s gamblers will come to fruition nor that they will all get their strategies and facilities right to attract those gamblers. But the region’s gamblers do look set to be spoilt for choice as to where to spend their money in the next decade. 
Read more about the Asian casino market in Global Betting and Gaming Consultants’ Global Gambling Report – Against The Odds.